FRAND principles could shape work of new EU digital watchdog on opening up access to data online

Out-Law Analysis | 29 Apr 2015 | 12:02 pm | 2 min. read

OPINION: A new pan-EU digital watchdog could apply principles normally reserved for setting the terms of licence for standard-essential patents to open up access to 'big data' online.

Businesses involved in developing technical standards for new technologies are often required by the standard-setting bodies they work alongside to licence any technology they patent based on those standards on fair, reasonable and non-discriminatory (FRAND) terms.

The principles of FRAND licensing could provide a template for ensuring companies that use online platforms, such as price comparison websites, to win business, are not unfairly shut out of accessing the data those platforms gather when providing their intermediary services.

According to media reports the European Commission is considering setting up "a central EU-wide body with the power to monitor platforms’ use of data, and to resolve disputes between the operators and the businesses they serve".

Those plans are not yet official, but it suggests the Commission is looking for a new way to regulate online platforms at a time when the data they hold is becoming increasingly important to the development of innovative new products and services.

Competition authorities already have tools at their disposal to address problems with competition in a market that stem from restrictions on access to data. However, enforcing those tools in digital markets is a challenge. It might be that the Commission is exploring an alternative system with a new hybrid ombudsman to make it easier to interfere in those markets.

EU competition law prohibits businesses that are dominant in a market from abusing that position of dominance. An abuse of dominance can occur when a dominant company refuses to supply or provide access to essential facilities. It could be said that data held by dominant online platforms is an 'essential facility' that rivals need access to in order to compete in the market. This is especially true as it is becoming increasingly clear that access to data, and the ability to analyse and glean insights from the information, can confer a competitive advantage.

However, in fast-moving digital markets it can be difficult to define precisely what the relevant market a company is supposedly dominant in and to then prove that dominance. Competition authorities would also need to build up a portfolio of evidence to show that data held by dominant online platforms is an 'essential facility' and that platforms shutting off others' access to that data are acting in breach of the competition law regime.

It's a potentially time-consuming and costly process, and might explain why the Commission is considering other options. The Commission has previously investigated the issue of access to data as part of its merger control procedures. It examined whether the combination of two data-rich businesses would raise barriers to competition in the communications market when scrutinising Facebook's acquisition of WhatsApp, for example.

Although the creation of a new hybrid watchdog would represent a radical step, it is not entirely surprising to see action being taken in the area of big data and digital markets. Just earlier this year, Giovanni Buttarelli, the European Data Protection Supervisor, said competition authorities, data protection authorities and consumer protection regulators need to collaborate more closely in the big data age to identify "issues of common concern and remedies".

The FRAND model is a potential solution, but it raises a number of questions too.

For example, would regulatory action be proactive or reactive? Should the new digital watchdog wait and act on complaints or impose FRAND requirements to anticipate issues before they develop?

There's also a question of what can be considered 'fair' and 'reasonable' terms on which to require access to data to be facilitated by platforms. In the context of standard-essential patent licensing, some cases have gone to the EU's competition regulator and even its highest court to resolve those issues.

The creation of a new digital watchdog might be aimed at addressing limitations in the way competition authorities can address the question of access to data in online markets, but it must not lead to a confusing additional layer of regulation and protectionism in the EU.

Natasha Pearman is an expert in technology and competition law at Pinsent Masons, the law firm behind Out-Law.com